Credit Card Shortfall Forces $3B Spiegel Inc. To File for Bankruptcy

Spiegel Inc. on Monday succumbed to its credit crunch, filing for Chapter 11 bankruptcy court protection in Manhattan.

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Spiegel, whose catalog is just two years shy of its hundredth anniversary, was once the name frequently heard by viewers as premium prizes that were given away on such daytime programs as "Let’s Make a Deal."

Kosturos said that the Spiegel brand identity is "still very strong. It has a great history, but it does need some new merchandising ideas."

In charge of reinvigorating the Spiegel Catalog and Newport News direct-marketing units is Geralynn Madonna, a 21-year Spiegel veteran who was named president and chief executive officer of the two units on Friday. In her most recent position at Newport News, she oversaw all companywide operations, including merchandising, financial management, product design and development.

Madonna said Monday that her focus will be on reviewing the customer research data on file and work on reconnecting the Spiegel brand with the consumer. The merchandising and marketing focus is similar to what she did at Newport News. About 30 percent of the customers who shop at the Newport News catalog are also Spiegel customers.

According to Madonna, the Newport News customer has a median age of 42 years and an annual income of $50,000. "She is very appearance focused, is romantic and wants to be noticed. She is well-dressed and value is important, both in terms of sale price and quality. The Spiegel customer is older, with a higher annual median income. Value is still very important, but less so than for the Newport News customer," Madonna noted.

She said she expects to complete an outline for the restructuring of Spiegel’s catalog in the next couple of months.

According to Lagnado: "Although the Spiegel brand is mature and somewhat equivalent to the position of traditional department stores, Eddie Bauer is fundamentally a very desirable brand. I believe the company will emerge from Chapter 11, because of the viability of the brands. Eddie Bauer is particularly valuable, and some of the Eddie Bauer expansion can be pulled back under the umbrella of Chapter 11."

Kosturos told WWD that it was still too early to tell whether the Otto family from Germany would continue to bankroll the distressed firm. Michael Otto is Spiegel’s chairman, and financial sources said the family has loaned the company about $350 million in the last two years.
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